GENERAL INSURANCE Flashcards
A tornado that destroys a property would be an example of what?
Peril.
In Insurance contracts, when is the offer usually made?
When insurance application is submitted.
Wagering on a sporting event is known as what type of risk?
Speculative.
According to the Law of Agency, who represents principal?
Agent or Producer.
What is the consideration on the part of the insurer?
A promise to pay in the event of a loss.
A situation in which a person can experience only a loss and no gain presents what type of risk?
Pure risk.
What are the three types of hazards?
Physical, moral, and morale.
Conditions that increase the chance of a loss are known as what?
Hazards.
What do individuals use to transfer their risk of loss to a larger group?
Insurance.
What is risk?
Uncertainty of loss.
What is the term for the causes of loss insured against in an insurance policy?
Peril.
What document is required for an insurance company to transact insurance?
Certificate of authority.
What are the five characteristics of an ideally insurable risk?
Loss must be
1) Due to chance.
2) Definite and Measurable.
3) Statistically predictable.
4) Not catastrophic
5) coverage cannot be mandatory.
In the agent/insurer relationship, who is considered the principal?
Insurer.
What type of insurer is formed under the laws of another state?
Foreign.
What are the three types of agent authority?
Express, implied, and apparent.
Insurance contracts are mandatory in nature. What does that mean?
Unequal values are exchanged between the parties to a contract.
Insurers are classified according to their domicile. What are the three types of insurers?
Domestic, foreign, alien.
What does indemnify mean in insurance?
To restore an insured to the same financial status as before a loss.
When would a misrepresentation on an insurance application be considered fraud?
When it is intentional and material.
What are methods of managing risk?
Avoidance, transfer, sharing, retention, and reduction.
What four elements of an insurance contract?
Agreement (offer and acceptance), consideration, competent parties, and legal purpose.
What does the term unilateral contract mean?
A unilateral contract is a one-sided contract. This means only one party makes an enforceable promise.
What does the term reasonable expectations mean in insurance?
Certain expectations for coverage that a reasonable person would have based in sources other than just policy language.
